Michael Hayes, president of digital communications at Initiative, has worked for over two decades in the advertising industry, including more than 10 years in the Internet. He spoke with Digiday about what the shift to programmatic ad buying means for media agencies, why clients don’t have the right model for measuring Internet branding, and what Facebook needs to do to realize its potential as an ad platform.
It sucked in the early days. It’s gotten better. Display advertising is not as good as full motion TV at brandingB but the question is whether the Internet can do better than other vehicles like outdoor, print or direct mail. I would never plan media on time spent, otherwise we’d dump all our money into Facebook. But it is a good proxy because you want to be where the consumer is. Many current marketing professionals that oversee the full marketing spectrum aren’t as familiar with digital channels as their Millennial counterparts. Their comfort zone is in a formula of if they run a certain weight of TV or other media types, they’ll see so much product sales. That model has been flipped on its head by digital. It doesn’t follow that and can’t. A new model hasn’t been developed. There’s not a mathematical ROI model that’s reliable in the digital space to allow them to feel comfortable. That model is very difficult. There are a lot of bright people in companies working on it, like Google.
We see tech platforms capturing tons of consumer attention and building ad models around that. Yet they’re not media companies in the traditional sense. What can these big platforms, like Facebook and Twitter, learn from how media works?
The thing Google did was provide a very viable product — even if they replicated from Overture — that worked and was easily scalable. It was also trackable. It had proven metrics that worked. In the new world of advertising, measurement is an imperative. The newer platforms don’t allow a lot of transparency with measurement. They need to provide value and measurement for the advertiser. I don’t mind Facebook limiting to the ads to the side and what they look like. That’s fine. But you need to be able to provide advertising products that are advertiser-friendly so you can prove the advertising is working. If you can’t do that, advertisers aren’t gong to come back. The problem with Facebook is they don’t provide that relevance to the degree it’s working better than other ad opportunities. They certainly have enough data. We don’t buy to the degree you’d think we might because it lacks that contextual relevance.
The reason it gets so much attention is it’s on the hearts and minds of all three core constituencies: agencies, advertisers and publishers. It has a huge impact on the livliehood of publishers. How they manage it is much trickier. It’s one thing if you’re AOL or Yahoo, you probably have a good system to manage distressed inventory, but others don’t. They’re done as efficiency plays. They do a good job at capturing demand. I don’t think they’ve done a really good job at generating demand. We’re in the business of both. We need to generate demand. We haven’t seen that. Now, as they move into ad exchanges for other channels — video, TV and mobile video — you’ll see those exchanges be pretty relevant in terms of driving demand. It remains to be seen how well they do that.
Does the shift to server-to-server buying change the role of the media agency?
It changes a lot. Agencies need to move from being a media holding agency that’s buying and becoming a consultative marketing partner for their clients. There will be an element of media that will be heavily commoditized. I don’t think it will be 80 percent. There will be a piece of the media puzzle that will be planned and purchased how we do it now. The fact is the landscape is getting more complex. The only thing that’s constant is change. A human being will have to navigate all that change. That’s the role of media management firms in the future. Agencies in the media space tend to get pulled down to the the very tactical level. They need to go upstream.
I can definitely see how complexity serves the agency to a degree. Do clients still struggle with how complex the digital media world is? It would seem like on the one hand they have a very comfortable system for analog media but on the other a mess when it comes to digital.
They definitely struggle with the complexity. They used have two different departments. If you talk to any adv, they know there’s a demographic audience shift where Millennials are becoming the new purchase power consumers and their elders are in their twilight years when they’re saving. The question is how do you shift your spending. They can’t ignore that world anymore. What they used to do before, the formula doesn’t work as well.
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